Spain's defense budget is slated for a substantial increase, with approximately €4 billion more allocated annually, predominantly benefiting six major companies: Airbus, Indra, Navantia, Santa Bárbara, ITP Aero, and Sapa.

Collectively, these firms account for over 80% of the national defense industry, which reported consolidated revenues of €13.9 billion at the end of 2023. The infusion of funds is part of Spain's commitment to the North Atlantic Treaty Organization (NATO) to increase defense spending to 2% of its Gross Domestic Product (GDP) by 2029, from the current €17.5 billion (1.32% of GDP) to over €36.5 billion over the next five years.

Airbus dominates the Spanish defense market, headquartered in France and representing 52% of the aerospace sector's activity and 49% of overall defense sector activities in Spain.

The company generates approximately 14,300 direct jobs and 50,000 indirect jobs, contributing over €2.2 billion to the industrial fabric.

Airbus is involved in five major military programs, including the Eurofighter, for which Spain has invested €4 billion in its current phase.

Recent discussions between Spanish Prime Minister Pedro Sánchez and Airbus CEO Guillaume Faury reaffirmed their partnership and future project explorations.

Foreign Minister José Manuel Albares cited Airbus as an example of a European firm that can outpace its American competitor, Boeing.

Navantia, a key public company, is focusing on significant projects such as the F110 frigates, costing around €4.3 billion, and the S-80 submarines, with a budget of nearly €4 billion.

Despite its prominence in Spain, Navantia ranks 74th in the global military industry, indicating a considerable gap.

For comparison, it operates at a scale sixty times smaller than that of Lockheed Martin, the leading U.S. defense contractor.

The Spanish government identifies Indra, in which the state holds a 28% stake, as a potential leader in the defense sector.

Indra’s flagship project, the Future Combat Air System (FCAS), is not expected to be operational until at least 2040, and the company is currently ranked 86th globally.

Following the acquisition of Hispasat, Indra's new president, Ángel Escribano, has expressed interest in expanding collaborations with ITP Aero and Santa Bárbara, the latter being owned by General Dynamics, which has stated that its Spanish subsidiary is not for sale.

Santa Bárbara, involved in the Tess Defence project alongside Indra and others, focuses on the new 8x8 vehicle program with an investment of €2.5 billion.

ITP Aero specializes in aircraft engine manufacturing, while Sapa, a supplier of transmissions for the U.S. Army, recently appointed former Secretary of Industry Raül Blanco to its team.

The expected increase in defense spending in Spain is anticipated to create opportunities for small and medium-sized enterprises (SMEs) in the industry.

There are currently 376 SMEs which possess the agility to embark in defense projects not easily undertaken by larger firms.

One such example is the Oesía group, which provides advanced technology through its subsidiary, Tecnobit, for initiatives including the Eurofighter.

Spanish military industry operations are dispersed across multiple communities, potentially allowing the anticipated workload increase to be distributed nationwide.

However, Madrid hosts the largest concentration of defense firms due to the presence of the Ministry of Defense.

Notably, Catalonia is the only major region lacking a central office from any of the top 75 defense companies.

As the government begins to finalize the deployment of increased defense expenditures, a widespread call for efficiency in investment execution has emerged from the sector.

One industry executive has suggested that the Ministry of Industry should play a larger role in the rearmament plan, reducing the traditional leadership role of the Ministry of Defense in business relations.

Currently, the Ministry of Industry invests around €1.3 billion annually in military projects.

Analyses indicate European defense spending may need to exceed 2% of GDP to compensate for reduced U.S. contributions.

To reach 3.5% of GDP, research indicates Europe would require approximately €250 billion in annual defense expenditures.

Experts have supported the view that increased spending must be aimed at sustaining industrial capabilities, replacing retiring U.S. equipment, and equipping armed forces with technological advancements that maintain a comparative advantage over Russian military capabilities.